Sprints name has been floated as an unexpected suitor for Exodus Communications, a combination that makes sense in a world where service providers aim to compete with IBM in the managed services arena. In addition to its wireless and wireline telephone services divisions, Sprint manages one of the largest Internet backbones and owns its own hosting unit. The company also has made forays into high-speed wireless data with a string of spectrum acquisitions. Keith Paglush, president of Sprints E-Solutions division, spoke to Senior Writer Max Smetannikov on the heels of the news last week that Exodus had filed for bankruptcy protection. Paglush celebrates a year at the head of E-Solutions this month; before that, he managed Sprint Internet and was vice president of operations for Sprints PCS unit.
Q: Is the Exodus bankruptcy the end of Web hosting as we know it?
A: I dont know Exoduss business plan well enough to comment on [it], but I will comment on the state of the industry. First off, as you look at players that have a colocation or island - one product, one service - strategy, it is not a surprise there are problems with that. We did face-to-face sessions with over 1,000 CIOs [chief information officers] in the last year and a half, and what they have been telling us is that people want end-to-end solutions from a single provider. As we put together Sprint E-Solutions last year, we pulled together an offering around being able to provide not only transport, but also SLAs [service-level agreements] from transport to security to all managed services like Web hosting and colocation. We also have as a cornerstone a professional IT consulting [organization] where we sell hardware [and] applications, and specialize in mobility. This is our key practice. We have always said our key differentiators are the quality of our network, the fact we have done 24/7/365 in the managed hosting environment, the alliances we have formed with good players out there and our capabilities in mobile commerce. We still believe this is the right road, and we are seeing a dramatic upswing in business - a great interest in security, a great interest in outsourcing and IT consulting in a down economy. What people say most often is that they [like that they] can get it all from one source: Sprint.
Q: Being a one-stop shop, what are you doing to control costs on the back end?
A: We have a very healthy back-office system that automates a great deal of what we do on the Web hosting and managed services side. We have invested large amounts of capital in Sprint E-Solutions, both on the infrastructure side - building 10 Internet centers being a part of it - and building back-office systems.
Q: How are you planning to grow - organically, or by acquisition? You were named as a potential buyer of Exodus.
A: We dont comment on business development activities. Our focus right now is clearly on growing the business organically. We have six - and soon will have 10 - data centers operational, so we are not necessarily looking for data center space. If we found something at a reasonable price, we would look at those, but none of our plans right now are based on acquisition. We are looking at opportunities out there though.
Q: Are there any specific lines of data center-centric services that are more popular than others?
A: Our business plan and existing business are heavily centered in the managed side - that is our area of expertise. With that managed side comes the bundling of end-to-end solutions and the provisioning of our consulting organization, as well as using our transport. What we are really about is provisioning solutions, as opposed to providing data center or colocation space. We do have colocation customers, but our focus is on provisioning total solutions for customers.
Q: How do you differ from other telephone companies with strong Web hosting bundles?
A: We have kept our business together, whereas many of the larger competitors have separated business and taken valuable resources such as wireless and disassociated them from the core business. They even may not have wireless as a piece of their assets base.
Q: As more voice becomes Voice-over-IP, do you think Sprint E-Solutions would become a large voice player?
A: Voice-over-IP is something we are looking at. We have not concentrated on it as a primary product, but Voice-over-IP is something I think we will be a player in.
Q: What would be your highlight events for the third and fourth quarters?
A: We will open four more Internet centers - Atlanta, Denver, Santa Clara-San Francisco, and Los Angeles.
Q: Will the predicted economic recession have any impact on your business?
A: What we are seeing right now is high demand from customers to outsource things we are experts in. We continue to be encouraged by the sales funnel that we see around our core products and services.